Technologies,preferences, and policies for a sustainable use of natural resources

We discuss eight contributions that combine the topics of sustainable natural resource use and economic dynamics. In the first part we consider enhanced oil recovery (EOR), carbon capture and storage (CCS), as well as innovations allowing for energy-efficiency improvements and renewable energy cost reductions. We discuss how to include these technologies and innovations in CGE models, how each of them has different effects on the timing of emissions and abatement and on total emissions, and how (first-best as well as second-best) complementary policies (in particular, emission taxes and innovation subsidies) differ across these technologies. In the second part we compare differences in intergenerational preferences towards resource conservation - altruistic preferences and concern for social status from relative consumption -and also found sharply contrasting effects across the alternative assumptions.     

Worktime Demands and Work-Family Interference: Does Worktime Control Buffer the Adverse Effects of High Demands?

This study examined whether worktime control buffered the impact of worktime demands on work–family interference (WFI), using data from 2,377 workers from various sectors of industry in The Netherlands. We distinguished among three types of worktime demands: time spent on work according to one’s contract (contractual hours), the number of hours spent on overtime work (overtime hours), and the number of hours spent on commuting (commuting hours). Regarding worktime control, a distinction was made between having control over days off and vacations (leave control) and having control over starting and finishing times (flextime). These three worktime demands were expected to have separate as well as joint effects on WFI, whereas worktime control should buffer these adverse effects of worktime demands on WFI. Stepwise regression analyses showed that working high numbers of contractual and overtime hours was indeed associated with high WFI. Further, worktime control indeed made a difference in terms of WFI: whereas leave control contributed directly to lower WFI, flextime buffered the adverse effects of long contractual workhours. Our results suggest that very long working days should be prevented, and that worktime control may be a powerful tool to help workers maintaining a good work–family balance.     

International capital market integration: Implications for convergence, growth, and welfare

This paper studies the effects of international capital market integration on welfare and the speed of adjustment in a two-region endogenous growth model. Monopolistic firms undertake research and development (R&D) to improve their productivity level. National and international knowledge spillovers affect the returns to R&D. The two countries differ with respect to the initial productivity level and R&D capability (which is a proxy for human capital and structural policies). Long-run productivity gaps are determined by the difference in R&D capability. Over time, there is conditional convergence in productivity levels. The speed of convergence is larger with integrated international capital markets than without. Long-run gaps in consumption levels are larger in the former situation than in the latter. Capital market integration harms (benefits) the leading (lagging) region if domestic spillovers are more important than international spillovers and differences in R&D capabilities are small.The authors research is supported by the Royal Netherlands Academy of Arts and Sciences. He thanks Lucas Bretschger, Theo van de Klundert, and Richard Nahuis, Thomas Steger, and Helmut Wagner for comments on an earlier version.     

Entropy,environment, and endogenous economic growth

This paper investigates the proper modeling of the interaction between economic growth and environmental problems, summarizes under which conditions unlimited economic growth with limited natural resources is feasible, and describes how sustainable growth can be achieved. It synthesizes the results from various environmental endogenous growth models.The physical dimension and the value dimension of economic activity have to be treated as conceptually distinct. Accumulation of natural variables is bounded due to biophysical laws (notably, the entropy law). However, economic value may grow through the substitution of reproducible human inputs for natural inputs. The properties of knowledge, which is the primary human input, do not contradict unlimited new knowledge creation.     

Taking Time for the Environment: On Timing and the Role of Delays in Environmental and Resource Economics

Ecosystem transformation and climate change evolve over long time scales. The effects of the economic decisions on the natural environment are also of a long-run character because they relate to investment decisions and capital stocks. At the same time, the economy is short-sighted and subject to different kinds of market failures. The time it takes to notice the changes and adequately address the associated problems affects the dynamics and inertia of the process. We discuss some recent contributions and new research questions that deal with time and timing in environmental and resource economics.     

Environmental policy and sustainable economic growth

Summary This paper investigates the consequences of environmental policy for welfare, consumption and production growth in a situation in which environmental quality is initially too low. The natural environment is incorporated in endogenous growth theory in a way that is consistent with some simple notions from the laws of thermodynamics. Environmental policy affects growth, both in the long run and in the short run, by affecting the productivity of investment and the savings behavior of consumers. The environment provides necessary inputs to economic production and accumulation processes. Hence improvements in environmental quality that follow environmental policy may boost the productivity of the environment and growth.     

Brown Growth,Green Growth,and the Efficiency of Urbanization

We analyze the efficiency of urbanization patterns in a stylized dynamic model of urban growth with three sectors of production. Pollution, as a force that discourages agglomeration, is caused by domestic production. We show that cities are too large and too few in number in uncoordinated equilibrium if economic growth implies increasing pollution (‘brown growth’). If, however, production becomes cleaner over time (‘green growth’) the equilibrium urbanization path reaches the efficient urbanization path after finite time without need of a coordinating mechanism. We also generalize these results by taking other forms of congestion and urban land markets into account.     

Economic Growth and the Diffusion of Clean Technologies: Explaining Environmental Kuznets Curves

The paper provides a theoretical explanation for the inverted U-shaped relation between pollution and income often found in empirical research (Environmental Kuznets Curve). We model the transition in the pollution pattern as a change in general purpose technologies and investigate how it interferes with economic growth driven by quality improvements. We provide an analytical foundation for the claim that the rise and decline of pollution can be explained by endogenous innovations, policy-induced technology shifts, and intrasectoral changes. Once environmental degradation becomes too severe, regulation is introduced by which society forces the economy to make a transition to cleaner production.     

The Skill Premium, Technological Change and Appropriability

This paper demonstrates that an increase in the relative supply of educated workers generates a structural change in the production structure towards a knowledge-intensive production process. This structural shift may ultimately lead to an increase in the return to educated labor despite the increase in their supply. The paper argues that the steady increase in the supply of educated workers that most Western economies have experienced in recent decades may be viewed as the driving force behind the observed pattern of wage inequality. In particular, the paper demonstrates that if firms can appropriate a sufficient share of the intertemporal return from knowledge generating activities of their labor force, a gradual increase in the supply of skilled workers would generate only a temporary reduction in the skill premium followed by a permanent increase in the return to skill.